· Which instruments will you trade, e.g. stocks, options, bonds, forex, futures? We're hoping you've decided you will invest in stocks, because if you’ve chosen anything else this site is not for you!
· Which market or markets will you trade, e.g. NYSE, NASDAQ, FTSE, DAX?
· How much time can you devote to trading each day?
· How will you choose what to buy?
· How will you know when to buy?
· How long do you intend to hold - your holding period?
The answer to these questions will determine what type of trader you are, and this will form the bedrock for your trading plan.
The final choice to be made is whether you will be a discretionary or a mechanical trader. Both types of trader will have a system which throws up buying signals, but the difference lies in the way the trader handles them. A discretionary trader will review the signals and decide if he wants to take them or not – he may be worried about the overall mood of the market, or a major piece of data may be due for release later that day, and he may decide to pass. A mechanical trader will take the signals without question – he has faith that his back-tested system will have a positive expectancy if he doesn't try to second-guess it.